The long-term goal of this project is to elucidate molecular mechanisms that regulate cell-cell communication during development. We are interested in two related key questions in cellular communication: 1) how are tissues patterned and correctly connected by long-range signals, and 2) how are cells structures and functions coordinated at short-range with those of their neighbors. We study these processes by focusing on early developmental patterning, and on development of a specialized cell-cell interaction zone, the neuromuscular junction (NMJ). Bone morphogenetic proteins (BMPs) function at both long-range and at short-range to accomplish diverse patterning control. We have previously revealed how evolutionary changes in proteolytic control of BMP binding proteins affect the function of multi-molecular BMP shuttles critical for the formation and function of morphogen gradients. Such gradients control the cell fate and tissue allocation and impact the patterning of early embryos as well as later developmental processes across the animal kingdom. BMPs are also utilized to modulate the growth, development and homeostasis of synaptic junctions, such as Drosophila NMJ - a glutamatergic synapse similar in structure and function to vertebrate central excitatory synapses. In flies each NMJ is unique and identifiable, synapses are large and accessible for electrophysiological and optical analysis, making Drosophila NMJ a powerful genetic system to study synapse development. At the Drosophila NMJ, Glass bottom boat (Gbb), a BMP-type ligand secreted by both muscle and motor neuron, provides a signal that controls synaptic growth and neurotransmitter release. BMP signals via (i) a canonical pathway, which activates transcriptional programs with distinct roles in the structural and functional development of the NMJ in response to accumulation of phosphorylated Smad (pMad) in motor neuron nuclei; and (ii) a noncanonical, Smad-independent pathway, which connects synaptic complexes to microtubules to modulate synapse stability. Intriguingly, pMad also accumulates at synaptic sites but the biological relevance of this phenomenon has been a mystery for over a decade. We have recently discovered that pMad signals are selectively lost at NMJ synapses with reduced postsynaptic glutamate receptors. Specifically, loss of a particular receptor subtype (type-A glutamate receptors) induced complete loss of synaptic pMad signals. In contrast, in the absence of type-A receptors, the pMad-positive signals persisted in the motor neuron nuclei, and expression of BMP target genes was unaffected, indicating a specific impairment in the pMad production/ maintenance at synaptic terminals. Furthermore, the accumulation of synaptic pMad followed the activity and not the net levels of postsynaptic type-A receptors. Thus, synaptic pMad appears to function as a local sensor for NMJ synapse activity. Using genetic epistasis, histology, super resolution microscopy and electrophysiology approaches, we demonstrated that the synaptic pMad accumulation is triggered by a completely novel BMP signaling pathway that is genetically distinguishable from all other known BMP signaling cascades. This pathway does not require Gbb, but depends on presynaptic BMP receptors and postsynaptic type-A glutamate receptors. Also, this novel pathway does not contribute to the NMJ growth or synapse stability and instead influences synapse development in an activity-dependent manner. Super resolution studies revealed that synaptic pMad localizes in large clusters at the active zone, in close proximity to the presynaptic membrane, and in perfect juxtaposition with each postsynaptic density. Since pMad is relatively short lived, synaptic pMad likely represents pMad that is locally generated/ maintained by active BMP/ BMP receptor complexes, protected from endocytosis. Intriguingly, selective disruption of presynaptic pMad reduces the postsynaptic levels of type-A receptors, indicating that synaptic pMad functions to stabilize active type-A receptors at synaptic locations. This positive feedback loop provides a molecular switch controlling which flavor of glutamate receptors will be stabilized at synaptic locations as a function of synapse status. Since BMP signaling also controls NMJ growth and stability, BMPs offer an exquisite means to monitor the status of synapse activity and coordinate NMJ growth with synapse maturation and stabilization. The molecular mechanisms underlying the ability of synaptic pMad to function as an acute sensor and modulator for postsynaptic activity are currently investigated.